Build your deal team early
You find a listing — from a broker, BizBuySell, Axial, direct outreach, or a referral. At this stage you have a teaser: business type, revenue, EBITDA, asking price, and location — often anonymized. Your job is a quick pass/fail assessment before requesting more information.
- Run quick EBITDA multiple check — is asking price reasonable?
- Check industry and geography fit vs your search criteria
- Look for obvious red flags: declining revenue, high customer concentration
- If it passes, request the CIM — don't overthink it at this stage
You sign an NDA and receive the Confidential Information Memorandum (CIM). This is the broker's marketing document — typically 20–60 pages covering business overview, financial summary, management team, growth opportunities, and customer information. Your job is to evaluate whether it's worth a deeper conversation.
- 3+ years of financial history — revenue trend, EBITDA trend
- Customer concentration — is revenue spread or concentrated?
- Owner's role — active operator or passive? What happens at transition?
- Growth story — is it believable and supported by data?
- Missing sections — a thin CIM may signal a thin deal
You meet the seller — usually a call first, then an in-person visit. This is your chance to evaluate the owner beyond the numbers: their motivation for selling, how the business really runs, what happens to key employees, and whether you trust what they're telling you.
- Why are you selling now?
- What does a typical week look like for you?
- Who are your top 3 customers and how long have they been with you?
- What would you do differently if you were starting over?
- Who on your team knows the most about running this business?
If the deal still makes sense, you submit a Letter of Intent — a non-binding offer that establishes price, structure, key terms, and an exclusivity period (typically 60–90 days) during which the seller can't talk to other buyers. This is the moment the deal becomes real.
- Purchase price and structure (asset vs stock purchase)
- Proposed capital stack — equity, SBA loan, seller note
- Working capital target and treatment
- Seller transition and employment agreement outline
- Exclusivity period length and conditions
- Contingencies — financing, due diligence findings
The books open. You have 60–90 days to verify everything the seller told you. Tax returns, bank statements, customer lists, employment contracts, vendor agreements — all of it. This is where deals die or get renegotiated. Surprises in due diligence are normal. How you handle them determines whether you close.
- Revenue doesn't match bank statements — numbers were inflated
- Key customer leaves or signals they won't stay post-transition
- Hidden liabilities — lawsuits, tax liens, equipment that's worse than stated
Your SBA lender runs their own parallel diligence. They need their own set of documents, will underwrite the business independently, and will order an independent business valuation. The SBA process typically takes 60–90 days from full application to closing. Start it as early as possible — it's usually the longest path to close.
- Pre-qualification — before LOI (ideally)
- Full application submitted — week 8–10
- Underwriting review — week 12–16
- SBA approval (credit decision) — week 14–18
- Closing preparation — week 18–22
Your M&A attorney drafts the Asset Purchase Agreement (APA) — the definitive legal document governing the transaction. This is where every deal term gets locked in: what's included, what's excluded, representations and warranties, indemnification, and closing conditions. Expect multiple rounds of negotiation.
- Representations & warranties — what seller is promising about the business
- Indemnification — who's on the hook if something was wrong
- Earn-out structure — if price is contingent on performance
- Escrow holdback — money held back to cover post-close issues
- Non-compete agreement — how long seller can't compete
Closing day. Wire transfers, signature pages, bill of sale. The business is yours. The seller begins their transition period — typically 30–90 days of working alongside you to introduce you to customers, employees, and vendors. The transition period is often the most stressful part of the entire process.
- Meet every key employee individually — listen before changing anything
- Call every top 10 customer personally — introduce yourself
- Understand the real operational rhythm before making changes
- Track cash flow weekly — working capital surprises are common
This guide is for informational purposes only and does not constitute legal, financial, or investment advice. Every acquisition is unique — consult your M&A attorney, CPA, and SBA lender throughout the process.